Atlanta Chamber of Commerce

Ambassador Mansfield's Remarks to
the Atlanta Chamber of Commerce Far East Delegation
Tokyo American Club
September 29, 1986
I welcome visits by groups such as the Atlanta Chamber of
Commerce because they give me a chance to see old friends such
as Governor Busbee, former Congressman and Ambassador, Mayor
Andrew Young as well as my many Japanese friends here today -­but
for other reasons as well. The objectives of groups such
as yours and the Japa , -US Southeast Governors' Association
represent a primary path out of the difficulties confronting us
on the trade front. That path is communication between people,
the promotion of direct investment between our nations, greater
understanding and the commitment to work together towards a
mutually desirable goal -- which after all is the very essence
of trade. Both sides must profit.
You present an economic solution -- the cross-fertilization
of industry ?nd ideas -- to economic problems which have become
increasingly political, and even emotional issues. As long as
we talk constructively as· friends, partners and neighbors
and we are, after all, neighbors in the Pacific Basin,
particularly in this age of jet travel. As long as we talk
constructively, and not pointing the finger at someone else,
not saying "let George do it", then I am convinced that we can
overcome all our differences in time. It's particularly
noteworthy that a group of Atlantic States has played a key
role in expanding the relationship with our Pacific partner.
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
It's proof that "where there's a will, there's a way." I
sometimes think that in recent months the perception that
Japan's markets are closed has built, and has begun to
constitute a barrier to U.S. penetration. Executives back in
the U.S. headquarters have trouble believing they have a fair
chance at a contract or a market in Japan and are reluctant to
take the time and to risk the required investment. The leading
role taken by state and local delegations such as yours is of
great importance in keeping the flow of contracts, ties, ideas
and people going between our countries.
This year marks the tenth anniversary of the founding of
the Japan - US Southeast Association, and it is worthwhile to
look at where we were ten years ago -- in Atlanta -- and how
far we have come today, especially since just slightly more
than ten years from now we will be standing on the brink of the
21st century.
Ten years ago we had $42 billion in total two-way trade
with all of East ·Asia, i ncluding Japan. Last yea_r, -in 1985,
out two~way trade with East Asia carne to just under $200
billion. Our two-way trade with Japan alone rose from $~6 . 6
billion in 1976 to $94 billion in 1985. Since 1980, U.S . trade
with East Asia has surpassed our trade with Western Europe - ­the
region which has historically and traditionally been our
largest trading partner -- and that differential will continue
to expand . . ·
- 2 - .
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
Direct Japanese investment in the US in 1976 stood at a
little over $4 billion. It has now topped $25 billion. In the
Southeastern portion of the United States, Japan has made major
investments which have greatly benefited the region in terms of
employment, understanding and tax revenue. The SO~~ plant in
West Dothan, Alabama, employs 1,800 people; the Nissan plant in
Smyrna, Tennessee, has provided jobs for approximately 3,000
people; while the YKK plant in Atlanta, a pioneer, employs
something in the range of 600 Georgians, to name but a few.
US direct investment in Japan has grown to $9.1 billion in
1985 out of about $2~ billion invested in the rest of East Asia
and $233 billion worldwide. The returns on American investment
in Japan and East Asia are the best of any developed region of
the world, and better than some developing regions as well.
In just the past year or two there have been a number of
important milestones.
- We have made important progress in o~r MOSS talks on
electronics, forestry products, telecommunications and medical
equipment and pharmaceuticals. Negotiations on a fifth sector,
transportation machinery, are beginning now.
- The Action program, announced a year ago last July by
Prime Minister Nakasone, cut or eliminated 80% of all Japanese
tariffs and committed the Goverment to seek the elimination of
agricultural and other import quotas.
f
- 3 -
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
- The Maekawa Report lays out a courageous blueprint for
the restructuring of Japan's economy. Goverment and business
leaders here are working to implement those recommendations to
develop an economy based on domestic-led growth.
- Four foreign trust banks have now opened in Japan and six
foreign brokerage firms have gained long sought seats on the
Tokyo Stock Exchange.
- One year has passed since the so called "Plaza Agreement"
reached by the Finance Ministers and Central Bank heads of the
G-5 nations began the process of bringing the yen and the
dollar into a -more realistic balance. While the actual numbers
still look bad, the fact is that this reallignment of our
currencies is a precondition for better balance in U.S.-Japan
trade and the gradual transformation of the Japanese economy
away from excessive _export dependence.
Looking at the steady progress that has been made on so
many fronts particularly the fact that there is virtually no
issue in which negotiat~ons with the Japanese have not resulted
in a satisfactory agreement in the long run --make the
prospects for the next ten years seem much brighter.
The economic difficulties we face place obligations on both
of us. There are things which th~ Japanese must do in order to
preserve and enhance the international free trade system. They
i
- 4 -
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
have been the chief beneficiary of that system, and given their
lack of natural resources, they stand to lose the most if that
system breaks down. The Japanese themselves have come to
recognize the need for improved market access as well as the
importance of restructuring the economy away from
overdependence on exports and in the direction of expanded
domestic demand. But we place a premium on fairness. There
are some difficulties which are of our own making and it's up
to us to bring about solutions, and to do so as expeditiously
as possible.
S~ecifically I am referring to our federal budget deficit
which seriously threatens our economic growth and welfare.
Approximately $133 BILLION dollars in '85 went to pay only the
INTEREST on the debt! It's the second largest item in the
budget. 14i of every tax dollar goes to pay that interest
not the principal-- the interest! I don't know any more about
Gramm-Rudman than what I read in the newspapers, but if it can
help us to cut the federal budget, then it will have served a
useful purpose. A smaller national debt means lower interest
payments, · sustained competitiveness of the dollar, and greater
capital accumulation spurring investment, productivity and
economic growth.
Japan's global trade surplus, $61.6 billion, and it's
bilateral trade surplus with the United States, $50 billion in
1985 -- projected at over $60 billion in 1986 -- is an
intolerable burden on the world trading system. At the same
I
- 5 _ .
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
time, our own huge global trade deficit -- nearly $150 billion
last year illustrates clearly that our trade preble~ is not
a bilateral, but a global, one. Our trade deficit with Japan
went from $13 to $50 billion dollars in 5 years. A net
increase of $37 billion. But, during that same period; we went
from a $20 billion surplus to a $26.4 billion deficit with
Western Europe. A shift of $47 billion. So even if Japan were
to do everything that we have asked them to do, our bilateral
and global trade deficit would still not be eliminated.
--
My hope is that these trade figures may force us to do some
of the things which we~have be~n reluctant to ~o, force us to
face up to some of th~ facts we prefer to ignore, and may in
fact help to return the United States to the position of
competitive pre-eminence and economic strength that we were
used to. We've got to become more productive! We've got to
become more efficient and more quality conscious. Our products
must be more competitively priced. We've got to restore
"follow-through service". We've got to improve relations
between labor and industry, and I emphasize both -- all too
often adversarial -- and between industry and government.
Above all we've got to realize we're in it for the long haul
and that it takes the best efforts of all of us working
together.
Many of the nations which benefited from our economic aid
in the decades after World War II are now powerful
competitors. It's not only Japan, but also the so called "Gang
~
- 6 -
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
of Four", the "Four Dragons": Korea, Taiwan, Hong Kong and
Singapore. We're being beaten at our own game, and we don't
like it. We've got to get back that old time religion of
competitive products, prices and service that put America on
the map. If this challenge makes us more com~etitive, then the
sacrifices and often painful adjustments made in many of our
industrial sectors will serve to strengthen us as a nation over
the long run.
Protectionism is nDt the answer. It's been tried and it
just doesn't work. It raises prices, reduces competition,
increases· inflation a.nd hurts the. consumer. It would deal a
devastating blow to the developing nations. It runs contrary
to the free enterprise system, and in the long run hurts people
equally on both sides of the fence. Simply put, the answer is
more trade, not less.
The other important issue between our countries is defense,
and there we , are in good shape. We have a good mutual security
treaty with the .Japanese under which we are committed to come
to the aid of Japan if it is attacked -- AND WE WILL. We
occupy a number of very important bases as the guests of the
Japanese government and people. We pay no rent on them. The
Japanese contribute about one third of the cost of the
maintenance of these bases; $l.billion, 116 million in 1985 for
the upkeep of approximately 55,000 troops. That compares very
favorably to the conditions in Western Europe or in the
Philippines. But we're not out here just to defend Japan.
'~
- 7 -
. f
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
We're out here in our own sel f interest and our own de f ense.
The strategic importance of the Pacific area cannot be
overstated, and is not lost on the current leadership of the
Soviet Union. · General Secretary Gorbachev's speech in
Vladivostok in the end of July is one sign of a growing Sov i et
interest in this part of the world. The Soviets have 49
divisions on the Sino-Soviet border and four more north of
Vladivostok -- 31% of their ground forces, modern, first rate
and up to date. Thirty-two per cent of their Air Force is
based in this region. Then there is the Soviet Pac i fic ~leet
-- th~ biggest and best of _theii· four fleets, with over 400
ships, 115 submarines, 3 Kiev class aircraft carriers. Another
sign of their interest is the naval and air base at Cam Ranh
Bay -- a familiar name? -- which have realized the objective
first enunciated by Catherine the Great in the second half of
the 18th Century and that is to achieve access to warm water
ports the year round.
The Soviets have begun econpmic p~netrat~on of the South
Pacific . Because of disagreements between us and the island
nations over fishing rights, the Soviets have gained a foothold
in the South Pacific by signing a fishing agreement with the
tiny nation of Kiribati and establishing diplomatic relations
with Vanuatu and putting out "feelers" to others. This is a
serious sign of unmistakable intent, and it shouldn't have been
allowed to happen. The amount the Soviets paid for those
fishing rights with Kiribati -- a little over $1 million -- is
- 8
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
pe3nuts when we consider the strategic access they are _getting
in return.
What I'm trying to say, and something I have been saying
for quite a while now, is that the next century will be the
Century of the Pacific. This is not to denigrate the
importance of the Atlantic. On the contrary, it was the
courage of the pioneers from the Eastern States which opened
the frontier and cleared a trail to thP Pacific. Similarly it
is the initiative and determination of business leaders such as
I see here today which has made the difference in realizing the
immense potential of the Pacific Basin. You have come to the
right country, the right region and at the right time.
This is the new area of opportunity, a Basin of tremendous
natural resources, great potential markets, and generally
friendly people and governments. The successful and peaceful
development of the Pacific Basin, as well as its stability,
will depend upon the durability and strength of the U.S.-Japan
r~lat~o.nship -- the.mo~t important bilateral -relationship in
the world. It is in this Basin where it all is, what it is all
about and where our future lies.
* * *
- 9 -
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana

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Transcript

Ambassador Mansfield's Remarks to
the Atlanta Chamber of Commerce Far East Delegation
Tokyo American Club
September 29, 1986
I welcome visits by groups such as the Atlanta Chamber of
Commerce because they give me a chance to see old friends such
as Governor Busbee, former Congressman and Ambassador, Mayor
Andrew Young as well as my many Japanese friends here today -­but
for other reasons as well. The objectives of groups such
as yours and the Japa , -US Southeast Governors' Association
represent a primary path out of the difficulties confronting us
on the trade front. That path is communication between people,
the promotion of direct investment between our nations, greater
understanding and the commitment to work together towards a
mutually desirable goal -- which after all is the very essence
of trade. Both sides must profit.
You present an economic solution -- the cross-fertilization
of industry ?nd ideas -- to economic problems which have become
increasingly political, and even emotional issues. As long as
we talk constructively as· friends, partners and neighbors
and we are, after all, neighbors in the Pacific Basin,
particularly in this age of jet travel. As long as we talk
constructively, and not pointing the finger at someone else,
not saying "let George do it", then I am convinced that we can
overcome all our differences in time. It's particularly
noteworthy that a group of Atlantic States has played a key
role in expanding the relationship with our Pacific partner.
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
It's proof that "where there's a will, there's a way." I
sometimes think that in recent months the perception that
Japan's markets are closed has built, and has begun to
constitute a barrier to U.S. penetration. Executives back in
the U.S. headquarters have trouble believing they have a fair
chance at a contract or a market in Japan and are reluctant to
take the time and to risk the required investment. The leading
role taken by state and local delegations such as yours is of
great importance in keeping the flow of contracts, ties, ideas
and people going between our countries.
This year marks the tenth anniversary of the founding of
the Japan - US Southeast Association, and it is worthwhile to
look at where we were ten years ago -- in Atlanta -- and how
far we have come today, especially since just slightly more
than ten years from now we will be standing on the brink of the
21st century.
Ten years ago we had $42 billion in total two-way trade
with all of East ·Asia, i ncluding Japan. Last yea_r, -in 1985,
out two~way trade with East Asia carne to just under $200
billion. Our two-way trade with Japan alone rose from $~6 . 6
billion in 1976 to $94 billion in 1985. Since 1980, U.S . trade
with East Asia has surpassed our trade with Western Europe - ­the
region which has historically and traditionally been our
largest trading partner -- and that differential will continue
to expand . . ·
- 2 - .
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
Direct Japanese investment in the US in 1976 stood at a
little over $4 billion. It has now topped $25 billion. In the
Southeastern portion of the United States, Japan has made major
investments which have greatly benefited the region in terms of
employment, understanding and tax revenue. The SO~~ plant in
West Dothan, Alabama, employs 1,800 people; the Nissan plant in
Smyrna, Tennessee, has provided jobs for approximately 3,000
people; while the YKK plant in Atlanta, a pioneer, employs
something in the range of 600 Georgians, to name but a few.
US direct investment in Japan has grown to $9.1 billion in
1985 out of about $2~ billion invested in the rest of East Asia
and $233 billion worldwide. The returns on American investment
in Japan and East Asia are the best of any developed region of
the world, and better than some developing regions as well.
In just the past year or two there have been a number of
important milestones.
- We have made important progress in o~r MOSS talks on
electronics, forestry products, telecommunications and medical
equipment and pharmaceuticals. Negotiations on a fifth sector,
transportation machinery, are beginning now.
- The Action program, announced a year ago last July by
Prime Minister Nakasone, cut or eliminated 80% of all Japanese
tariffs and committed the Goverment to seek the elimination of
agricultural and other import quotas.
f
- 3 -
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
- The Maekawa Report lays out a courageous blueprint for
the restructuring of Japan's economy. Goverment and business
leaders here are working to implement those recommendations to
develop an economy based on domestic-led growth.
- Four foreign trust banks have now opened in Japan and six
foreign brokerage firms have gained long sought seats on the
Tokyo Stock Exchange.
- One year has passed since the so called "Plaza Agreement"
reached by the Finance Ministers and Central Bank heads of the
G-5 nations began the process of bringing the yen and the
dollar into a -more realistic balance. While the actual numbers
still look bad, the fact is that this reallignment of our
currencies is a precondition for better balance in U.S.-Japan
trade and the gradual transformation of the Japanese economy
away from excessive _export dependence.
Looking at the steady progress that has been made on so
many fronts particularly the fact that there is virtually no
issue in which negotiat~ons with the Japanese have not resulted
in a satisfactory agreement in the long run --make the
prospects for the next ten years seem much brighter.
The economic difficulties we face place obligations on both
of us. There are things which th~ Japanese must do in order to
preserve and enhance the international free trade system. They
i
- 4 -
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
have been the chief beneficiary of that system, and given their
lack of natural resources, they stand to lose the most if that
system breaks down. The Japanese themselves have come to
recognize the need for improved market access as well as the
importance of restructuring the economy away from
overdependence on exports and in the direction of expanded
domestic demand. But we place a premium on fairness. There
are some difficulties which are of our own making and it's up
to us to bring about solutions, and to do so as expeditiously
as possible.
S~ecifically I am referring to our federal budget deficit
which seriously threatens our economic growth and welfare.
Approximately $133 BILLION dollars in '85 went to pay only the
INTEREST on the debt! It's the second largest item in the
budget. 14i of every tax dollar goes to pay that interest
not the principal-- the interest! I don't know any more about
Gramm-Rudman than what I read in the newspapers, but if it can
help us to cut the federal budget, then it will have served a
useful purpose. A smaller national debt means lower interest
payments, · sustained competitiveness of the dollar, and greater
capital accumulation spurring investment, productivity and
economic growth.
Japan's global trade surplus, $61.6 billion, and it's
bilateral trade surplus with the United States, $50 billion in
1985 -- projected at over $60 billion in 1986 -- is an
intolerable burden on the world trading system. At the same
I
- 5 _ .
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
time, our own huge global trade deficit -- nearly $150 billion
last year illustrates clearly that our trade preble~ is not
a bilateral, but a global, one. Our trade deficit with Japan
went from $13 to $50 billion dollars in 5 years. A net
increase of $37 billion. But, during that same period; we went
from a $20 billion surplus to a $26.4 billion deficit with
Western Europe. A shift of $47 billion. So even if Japan were
to do everything that we have asked them to do, our bilateral
and global trade deficit would still not be eliminated.
--
My hope is that these trade figures may force us to do some
of the things which we~have be~n reluctant to ~o, force us to
face up to some of th~ facts we prefer to ignore, and may in
fact help to return the United States to the position of
competitive pre-eminence and economic strength that we were
used to. We've got to become more productive! We've got to
become more efficient and more quality conscious. Our products
must be more competitively priced. We've got to restore
"follow-through service". We've got to improve relations
between labor and industry, and I emphasize both -- all too
often adversarial -- and between industry and government.
Above all we've got to realize we're in it for the long haul
and that it takes the best efforts of all of us working
together.
Many of the nations which benefited from our economic aid
in the decades after World War II are now powerful
competitors. It's not only Japan, but also the so called "Gang
~
- 6 -
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
of Four", the "Four Dragons": Korea, Taiwan, Hong Kong and
Singapore. We're being beaten at our own game, and we don't
like it. We've got to get back that old time religion of
competitive products, prices and service that put America on
the map. If this challenge makes us more com~etitive, then the
sacrifices and often painful adjustments made in many of our
industrial sectors will serve to strengthen us as a nation over
the long run.
Protectionism is nDt the answer. It's been tried and it
just doesn't work. It raises prices, reduces competition,
increases· inflation a.nd hurts the. consumer. It would deal a
devastating blow to the developing nations. It runs contrary
to the free enterprise system, and in the long run hurts people
equally on both sides of the fence. Simply put, the answer is
more trade, not less.
The other important issue between our countries is defense,
and there we , are in good shape. We have a good mutual security
treaty with the .Japanese under which we are committed to come
to the aid of Japan if it is attacked -- AND WE WILL. We
occupy a number of very important bases as the guests of the
Japanese government and people. We pay no rent on them. The
Japanese contribute about one third of the cost of the
maintenance of these bases; $l.billion, 116 million in 1985 for
the upkeep of approximately 55,000 troops. That compares very
favorably to the conditions in Western Europe or in the
Philippines. But we're not out here just to defend Japan.
'~
- 7 -
. f
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
We're out here in our own sel f interest and our own de f ense.
The strategic importance of the Pacific area cannot be
overstated, and is not lost on the current leadership of the
Soviet Union. · General Secretary Gorbachev's speech in
Vladivostok in the end of July is one sign of a growing Sov i et
interest in this part of the world. The Soviets have 49
divisions on the Sino-Soviet border and four more north of
Vladivostok -- 31% of their ground forces, modern, first rate
and up to date. Thirty-two per cent of their Air Force is
based in this region. Then there is the Soviet Pac i fic ~leet
-- th~ biggest and best of _theii· four fleets, with over 400
ships, 115 submarines, 3 Kiev class aircraft carriers. Another
sign of their interest is the naval and air base at Cam Ranh
Bay -- a familiar name? -- which have realized the objective
first enunciated by Catherine the Great in the second half of
the 18th Century and that is to achieve access to warm water
ports the year round.
The Soviets have begun econpmic p~netrat~on of the South
Pacific . Because of disagreements between us and the island
nations over fishing rights, the Soviets have gained a foothold
in the South Pacific by signing a fishing agreement with the
tiny nation of Kiribati and establishing diplomatic relations
with Vanuatu and putting out "feelers" to others. This is a
serious sign of unmistakable intent, and it shouldn't have been
allowed to happen. The amount the Soviets paid for those
fishing rights with Kiribati -- a little over $1 million -- is
- 8
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana
pe3nuts when we consider the strategic access they are _getting
in return.
What I'm trying to say, and something I have been saying
for quite a while now, is that the next century will be the
Century of the Pacific. This is not to denigrate the
importance of the Atlantic. On the contrary, it was the
courage of the pioneers from the Eastern States which opened
the frontier and cleared a trail to thP Pacific. Similarly it
is the initiative and determination of business leaders such as
I see here today which has made the difference in realizing the
immense potential of the Pacific Basin. You have come to the
right country, the right region and at the right time.
This is the new area of opportunity, a Basin of tremendous
natural resources, great potential markets, and generally
friendly people and governments. The successful and peaceful
development of the Pacific Basin, as well as its stability,
will depend upon the durability and strength of the U.S.-Japan
r~lat~o.nship -- the.mo~t important bilateral -relationship in
the world. It is in this Basin where it all is, what it is all
about and where our future lies.
* * *
- 9 -
Mike Mansfield Papers, Series 32, Box 4, Folder 5, Mansfield Library, University of Montana